Pingali - India Agricultural Renaissance

1,048 views

Published on

Agricultural Renaissance and the pursuit of inclusive growth in 21st Century India. Lecture to the 94th Annual Conference of the Indian Economics Association. 28th December 2011, Pune, India.

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,048
On SlideShare
0
From Embeds
0
Number of Embeds
54
Actions
Shares
0
Downloads
27
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Pingali - India Agricultural Renaissance

  1. 1. Agricultural Renaissance and the Pursuit of Inclusive Development in 21st Century India Ajit Kumar Sinha Memorial Lecture to the 94th Annual Conference of the Indian Economics AssociationDr. Prabhu Pingali, Deputy Director& Mumukshu Patel, Program OfficerAgricultural Development December 28, 2011 *The views expressed here are personal and do not reflect the official position of the Bill and Melinda Gates Foundation.
  2. 2. Inclusive growth: emphasizes both the pace and pattern of growth  Inclusive growth and development Inclusive growth refers both to the pace and pattern of growth • Strong focus on economic growth  The role of agriculture: key to as a necessary condition for poverty reduction ensure inclusive growth in India in • Long-term perspective, concerned with sustenance of growth the 21st Century • Broad based, across sectors − Role in GDP • Include a large part of the country’s labor force • Emphasis on productive − Share of employment employment, not redistribution of income − Links with new markets • Aligned with the absolute definition of pro-poor growth • Fuelled by market-driven sources with government providing a facilitating function Source: World Bank (2009), “What is inclusive growth?’; also, Commission on Growth and Development, Strategies for Sustained Growth and Inclusive Development; Thorat (2010) “How Socially Inclusive has growth been?”; Planning Commission (2011), Faster, Sustainable and More Inclusive GrowthDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 2
  3. 3. The Green Revolution: 20th Century Indias inclusive growth experience  Agricultural productivity growth, unleashed by the Green Revolution, brought some of the most dramatic poverty reduction in India resulting in more inclusive development  This poverty reduction occurred – principally through Ag GDP growth – since India underwent the ‘Hindu rate of growth’ during those decades Source: World Bank (2008), World Development Report; national rural poverty line dataDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 3
  4. 4. But, we could have done better China and India: A comparative perspective ‘on pace’ % population in extreme Poverty Rate  Poverty 100  Indian poverty rates have not 84 poverty 80 fallen as quickly as China: in 1981 China had 835 million 60 59.8 41.6 people living in extreme poverty 40 (compared to 420 million in 20 India), in 2005 that number was 15.9 down to 208 million (for India it 0 stood at 456 million - an 1981 1984 1987 1990 1993 1996 1999 2002 2005 absolute increase of 36 China India million). Cereal Yields  Productivity 6000  Cereal yield gains are 5000 5450 stagnating in India and kilos/hectare 4000 much lower than in China. 3000 Chinese yields are far above 1211 the world average and rapidly 2000 2572 converging with Western 1000 Europe and the US. 0 947 1961 1971 1981 1991 2001 2009 China IndiaSource: World Bank, PovCal database; FAO December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 4
  5. 5. Pattern of India’s development Concentration of poverty in states Per capita incomes – a comparative lens on ‘pattern’ Brazil Chandigarh China Delhi Maharashtra Punjab Gujarat Tamil Nadu Kerala Karnataka India Andra Pradesh Uttarkhand West Bengal Orissa Rajasthan Assam Uttar Pradesh Madhya Pradesh Rwanda Bihar EthiopiaSource: Planning Commission, Data Tables; Economist Intelligence Unit; IMF, World Economic Outlook $0 $5,000 $10,000 $15,000 December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 5
  6. 6. Pattern of development: an alternative viewSource: NASA, Visible Earth Catalog December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 6
  7. 7. Agricultural Renaissance in India: the pursuit of inclusive development  A strong focus on small-holder productivity growth is critical to ensure inclusive development in India • To achieve this goal, we need a two-pronged agricultural development strategy that: 1. Links smallholders to supply chains to feed the growing urban middle class 2. Increases small-holder agricultural productivity in lagging regionsDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 7
  8. 8. Linking smallholders to supermarkets tofeed the growing Indian middle class Leveraging the power of markets for inclusive development © 2011 Bill & Melinda Gates Foundation | 8
  9. 9. Share of Urban and Rural Income (2005)Source: World Bank, Perspectives on Indian Poverty and ICP December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 9
  10. 10. Smallholders are taking advantage of newopportunities Dairy Hybrid feed maize Fruits and vegetablesDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 10
  11. 11. The Supermarket Reality Supermarket Sales- Top 5 Retailers (Account of ¾ share) 2000 1800 1600 1717 1400 1290 US $ million 1200 1223 1000 967 800 513 600 275 400 170 200 86 0 2003 2004 2005 2006 2007 2008 2009 2010 Futures Group* Reliance RPG (Spencers) Vishal (Megamart) Aditya Birla (More) Source: Reardon and Minten (2011)December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 11
  12. 12. FDI in retail: role in inclusive growthWhat have been the lessonsof FDI in other sectors in theIndian economy? Name Sales We already have joint Metro Cash&Carry 281 mn multinational investment in (Germany) the retail sector: has it hurt Bharti (Walmart) 116 mn the prospect of inclusive growth? Tata (Tesco UK) 103 mn Source: Reardon and Minten (2011) December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 12
  13. 13. How can policy facilitate this integration for inclusive growth?  Policies need to overcome the ‘scale mis-match’ by reducing the costs of smallholder participation in markets • Various contractual and/or out-grower arrangements can help overcome the ‘scale mismatch’  Policies should make information access cheaper and easier, and rules clearer  Policies should aim to enhance capacity to meet quality and safety standards  Policies should help manage risk and provide credit supportDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 13
  14. 14. Back to the future: jumpstarting‘Back to the future’: Increasing Agricultural Productivity inagricultural for Inclusivein lagging regionsLagging Regions growth growthEmerging opportunities and contexts © 2011 Bill & Melinda Gates Foundation | 14
  15. 15. Opportunities for jump-starting growth in lagging regions for inclusive development  We see new opportunities in catalyzing agricultural growth in lagging regions • Private Sector investment in Indian agriculture is increasing rapidly • Biotechnology offers exciting opportunities, much like high yielding varieties during the Green Revolution • Information revolution: mobile phones and other ICT developments offer unique advantages for agriculture, particularly in extension servicesDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 15
  16. 16. Role of the private sector in Ag R&D The changing locus of Ag R&D in India Share of Ag R&D Investments: 94-95 16.6 India R&D Ag Investments 800 688.3 700 600 2005 USD mn 500 83.4 400 Share of Ag R&D Investments: 08-09 300 271.8 251.3 200 30.9 100 54 0 1994-1995 2008-2009 Private Public 69.1 Source: Carl Pray et al, Private R&D in Agriculture in South Asia (forthcoming) Private PublicDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 16
  17. 17. Private sector Ag investment in India: by industry and origin 2008-09*  Private sector is S No Industry 1984-85# 1994-95# Total Indian USD (2005, mn) MNCs investing in a Seed and variety of 1 Biotechnology 1.3 4.9 88.6 49.3 39.3 industry areas 2 Pesticides 9 17 35.7 24.4 11.3 3 Fertilizers# 6.8 6.7 7.9 4.9 0.0  The MNCs are Agricultural playing a major 4 Machinery 3.7 6.5 40.5 20.5 20.0 Biofertilizers & role 5 Biopesticides 0 0 1.3 1.3 0.0  Private sector Ag 6 Poultry and feeds - 3.5 7.8 7.8 0.0 7 Animal Health 0.9 2.7 18.6 3.7 14.9 investments in 8 Sugar 0.9 2.5 10.8 10.8 0.0 progressive 9 Biofuels 0 0 13.1 13.1 0.0 states needs to Food, Beverages & be leveraged for 10 Plantations 1.3 10.3 27 16.2 10.7 lagging regions Total 23.9 54.1 251.3 155.0 96.2 Source: Pray (ibid)December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 17
  18. 18. Biotechnology: a revolution that’s already begun globallyDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 18
  19. 19. Will India lead or be left behind  Should policy enable or retard India’s ability to use biotechnology to help lagging regions accelerate their growth?  GMOs can help overcome pressing social challenges: example of Golden Rice  Biotech is not all GMOs—MAB selection  Ex-ante estimates of financial benefits of speeding technology development using MAB in India for rice has an NPV of $447 million  Stress tolerant varieties: Swarna sub-1 Yield advantage of Sub1 version is typically double, or around 1-2 t/ha under submergenceDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 19
  20. 20. The role of public sector in ensuring biotech is leveraged aptly for inclusive growth  Seek collaboration and partnership with the private sector  Concentrate on areas under-researched by the private sector  Establish IPR and bio-safety regulations  Generate public goods and human resource capacity  Explore new mechanisms for international collaborationDecember 28, 2011 © 2010 Bill & Melinda Gates Foundation | 20
  21. 21. Harnessing the power of information: mobile phones and ICT for agricultural developmentSource: TRAI; PWC (2011) December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 21
  22. 22. New contexts for Agricultural Development in India  With rapid economic growth and urbanization, largely following liberalization in the 1990s, we see several different contexts for agricultural development in India  Two key contexts that need to be understood more are: • Rising wages • Feminization of agricultureDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 22
  23. 23. Labor wages have increased rapidly  Much of the employment growth is in the non-farm sectors, which is creating a net pull away from agricultural labor and driving up wage rates. Source: Government of IndiaDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 23
  24. 24. Dealing with rising labor scarcity Short to medium term: − Small scale mechanization − Herbicide use & minimum tillage systems − Labor saving management practices − Changing contractual arrangements for leasing land Longer term: − Changes in the organization of production − Changes in farming systems – towards lower labor intensity − Reducing cropping intensities on marginal landsDecember 28, 2011 © 2010 Bill & Melinda Gates Foundation |
  25. 25. Increasing feminization of Indian agriculture: ‘50 percent solution’ for inclusive development  The symbolic (and real) face of the Indian small-holder has been the face of a woman farmer  Feminization of Indian agriculture is growing today, albeit in a different context • Migration from rural to urban areas is largely a story of men • Women are increasing their role in farm management, entrepreneurship and have a greater voice  Indian policy needs to leverage this development for inclusionDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 25
  26. 26. Key trends relevant to agricultural development in lagging regions Description Implications for lagging regions’ agriculture Small and • Operational land holdings in East Asia are small • Greater number of rural people relying on fragmented and fragmented (Avg. size in Bihar is 0.75 ha) agricultural income from smaller plots of land holdings • High incidences of landlessness (~32% of landless live in our eastern lagging regions) • Lagging regions adopted little of Green • Farmers cannot access useful information Revolution’s technology advances about new technologies or markets Water Scarcity • They are behind the rest of India in crop • Farmers continue unsustainable and low- productivity due to limited usage inputs yield farming practices • A significant amount of cultivated land in East • Farmers are exposed to farm losses and Climate-change India is vulnerable to flooding and droughts income fluctuations • Food supply is often at risk • Extension services offered at the central and • Farmers are not utilizing new technologies to Weak extension state government levels are ineffective at improve crop yield services delivery informing and training farmers • Outputs from research and development are • Existing technologies are not delivered to not being adopted farmers • R&D in agriculture has declined since the Green • Farmers are unable to utilize new innovative Infrastructure Revolution technologies to improve their crop yields • SAUs do not have enough fundingSource: “Food Processing in Bihar,” Government of Bihar; “Orissa Agriculture Statistics 2009.”; Department of Agriculture andCooperation, GOI. “Regional disparities in electrification of India – do geographic factors matter?” Center for Energy Policy andEconomics, Swiss Federal Institutes of Technology, Nov 2006. Map created based on 1999-2000 NSS data. 26
  27. 27. Policy agenda for lagging regions and inclusive development  Invest in infrastructure to link lagging regions with the mainstream economy  Encourage smallholders to meet the rising food and feed demand in the rapidly growing regions  Promote crop neutral intensification  Pro-actively connect agriculture and nutrition, using new technologies  Focus on education, health and safety-net programs for the ultra-poor  Emphasize the importance of girls’ education and empower womenDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 27
  28. 28. Conclusions The agricultural sector is key for India’s inclusive development – for better pace and pattern of growth • Small-holder productivity growth and links to emerging markets – like organized food retail – will be critical The private sector and markets can and must play a major role in catalyzing agricultural productivity New technologies need to be leveraged, particularly biotech, to better the prospects of lagging regions The feminization of Indian agriculture is an immense opportunity Indian government development strategy should facilitate an Agricultural Renaissance, this requires: • Smart investments: particularly in Ag R&D • Smart policies: to link small-holders to new markets, apt policies for biotech, streamlined rules and regulations for private sector in the Ag sector among othersDecember 28, 2011 © 2011 Bill & Melinda Gates Foundation | 28
  29. 29. Thank you!December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 29

×